COBRA Gets a Boost and You Need to Notice (Pun Intended)

Beginning April 1, 2021, COBRA eligible employees–even those who previously declined COBRA–can receive up to six months of free coverage.

WHAT: The 6-month extended benefit period is part of the stimulus bill or the American Rescue Plan act (ARP) which we summarized for employers last week. When the Senate got the bill, they increased the 85% subsidy from the House to 100%.

WHEN: The subsidy begins April 1, 2021, and expires September 30, 2021. The act also creates a special 60-day notice period for all qualified employees to enroll.

WHO: If eligible for COBRA, they are eligible for the subsidy. Assistance eligible individuals (AIPs) are those eligible for COBRA coverage due to an involuntary termination (not including gross misconduct) or a reduction in hours that occurs from April 1, 2021, to September 30, 2021.

HOW: Employers will obtain the subsidy, which is passed along to COBRA enrollees, through a payroll tax credit against employers’ quarterly taxes. The credit could also be advanced under rules set by the Treasury Department. If this sounds familiar, you are correct: a similar measure was enacted in 2009 and the hope is that this subsidy runs more smoothly for employers.

WHAT ELSE? By May 30, 2021, your COBRA Notice must reflect the subsidy and the special 60-day notice period for any workers who are COBRA eligible during the 6-month period–even those who have previously declined COBRA coverage. 

WHERE can I get help? Ah, you know. Foley & Foley is tracking this and all things workplace law. As the feds work through the nuts and bolts, we work on making it easier for you. Contact us.